Gold prices are rising thanks to the US financial stimulus

Mohammed Abdelkhalik
January 18, 2021
gold prices

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Gold Prices Outlook: 18th January 2021

Gold prices rose during online trading today, Monday, with the opening of the European market, after it recorded its lowest levels in about six weeks in the Asian session. As prices received some support thanks to the renewed demand for the metal as a safe haven, especially after the approval of a huge fiscal stimulus package to relieve from the repercussions of the Corona crisis.

Gold prices rose during immediate transactions by about 0.5% until 08:50 GMT, to trade around 1836.29 US dollars per ounce, compared to the opening level at 1825.40 dollars, and early in the session reached the lowest level at 1809.90 dollars per ounce, which is the lowest since last December.

XAUUSD chart - 18th January 2021

Financial stimulus raises gold prices

The gold has received some support recently thanks to renewed levels of demand for the metal as one of the best hedging tools in the face of inflation, especially after the announcement of a huge stimulus plan in the United States.

For his part, US President-elect “Joe Biden” revealed last week a proposed stimulus package worth 1.9 trillion dollars to support the largest economy in the world in facing the negative repercussions of the Coronavirus crisis, and aims to provide financial assistance to families and companies affected by the epidemic.

The US dollar

In terms of the US dollar index trading, the index rose during today’s trading session by more than 0.2%, in the second consecutive daily gain, thus having recorded its highest levels in nearly four weeks at 90.93 points, reflecting the continued rise in levels of the American currency against most global currencies. Which negatively affects the movements of gold and other metals priced in dollars.

This recent rise in the US currency is supported by the renewed purchases of the dollar as the best alternative investment in the other foreign exchange market, especially after the increase in the number of people infected with the Coronavirus in Europe and some governments tightening closure measures to limit the spread of the virus.

The US currency received more support over the past week, with investors focusing on buying dollars after the US long-term bond yields crossed the 1% barrier for the first time since last March to reach the level of 1.184%.

Returning to other metals trading, silver rose by 1.2% to $ 25.03 an ounce, and platinum gained 0.7% at $ 1081.10, while palladium increased 0.3%, recording $ 2389.82 an ounce.

Author Mohammed Abdelkhalik

Professional Trader and Analyst, economist in Financial and Forex market since 2004.holds an MBA from the American University in Egypt. Mohammed works as an economic writer and technical & fundamental analyst for many international Forex and financial trading companies in both English and Arabic on a daily basis.